The female factor on corporate boards

More women on corporate boards can increase focus on corporate social responsibility and the control functions of the board, but not necessarily more creativity.

RESEARCH @ BI: Women on corporate boards

Over the past years, women have played increasingly central roles in society in general, as well as in the business sector.

Norway has been at the forefront in one area of gender equality, and has introduced legislation mandating 40 percent representation of both men and women on the boards of directors in public limited companies (ASA companies).

Before the law was introduced, the percentage of women on the boards of these companies was a meagre six percent. Currently, more than four out of ten board members in public limited companies are women.

It is also worth noting that companies not subject to the law have also increased female representation on their boards. This has resulted in formidable growth in female board members in Norwegian companies.

“Women have become more visible, and have proven they can do a good job on the boards. There are many qualified women, and they are gaining more and more experience,” says Professor Morten Huse at BI Norwegian School of Management.

Huse is an internationally renowned expert on boards of directors, and has over the past 20 years studied value creation in Norwegian and international boards, publishing a number of books and scientific articles on the subject.

The Norwegian lesson

What happens when more women enter the board rooms? Does increased diversity result in more efficiency on the boards? In what way do women change how boards work? Could increased female representation promote creative discussions in the board room? Have boards improved their strategic discussions? Do women make boards tougher in terms of control functions? Are companies more conscious of their social responsibilities?

BI researcher Morten Huse, together with Sabina Tacheva Nielsen and Inger Marie Hagen, carried out a comprehensive study among 840 directors in the spring of 2006 to look at the contribution of female directors towards more efficient boards. Results from this study are now presented in the international science publication Journal of Business Ethics.

Focus on corporate social responsibility

So far, the trail of women entering Norwegian board rooms has not caused any revolutionary change, neither for better or for worse, according to the researchers. A higher female factor per se does not greatly affect the work of the boards.

If women are to make a difference, they must bring genuine diversity and real differences into the board rooms, and the boards must be able to utilise this diversity. According to Morten Huse, this is not a given .

The board researchers found that more women on the boards increased focus on control functions and corporate social responsibility. And this is good news during these times of financial crisis and increasing criticism of how large international companies operate.

There is also another area in which women can contribute to improvements – when the board looks at the company’s strategy.

However, Morten Huse and his team of researchers have not found that increased female representation per se leads to any more creative discussions in the board rooms

So far, there is no reason to be perturbed by the experiences from the Norwegian board experiment. Rather the opposite.